Indian services activity expands at slowest pace in over two years

*  January sees softer increases in sales and output 

* Jobs growth ticks higher, biz sentiment remains positive

* Cost inflation little-changed since December

FPJ News Service mumbai

After ending 2024 on a strong footing, service providers in India recorded a loss of growth momentum in January. New business intakes rose at the slowest pace since November 2023, curbing the upturn in business activity. Nevertheless, rates of expansion remained historically high and more jobs were created. Also, the degree of business sentiment was in line with its trend, according to a report released here on Wednesday.

As for prices, cost burdens increased to broadly the same extent as in December, with firms largely reporting greater payroll expenses. Meanwhile, charge inflation ticked higher. At 56.5 in January, the seasonally adjusted HSBC India Services PMI® Business Activity Index – based on a single question asking how the level of business activity compares with the situation the month before – indicated a sharp rate of expansion. However, the headline figure was down from 59.3 in December to its lowest level since November 2022. 

Pranjul Bhandari, Chief India Economist at HSBC, said: “India’s services sector lost growth momentum in January, although the PMI remained well above the 50-breakeven level. The business activity and new business PMI indices eased to their lowest levels since November 2022 and November 2023 respectively.

That said, new export business partly countered the downtrend and continued to rebound from a dip in late-2024, in line with official data which showed India’s services exports shinning in December and capturing a larger share of global trade.” Several companies linked output growth to favourable demand conditions, new business wins and investment in technology.